Baker Hughes predicts lower oil and gas spending in 2026
Baker Hughes announced on Monday that it expects global oil and gas producers to reduce their annual spending modestly in this year. The growth in Latin?America and offshore Africa will be offset by lower spending in?European and Middle Eastern countries.
This year, the Middle East conflict has dominated the energy market. The repeated escalation of tensions between Iran and the U.S. forced producers to adopt a more cautious approach instead of increasing drilling activities.
On a call with analysts, CEO Lorenzo Simonelli stated that customers are focused on maximising?production? from existing assets and preserving flexibility in order to respond to changing market conditions.
The oilfield services provider's shares rose more than 6% after the company beat its quarterly profit expectations. Industrial and energy technology orders doubled year-over-year, reaching a record of $7.1 billion. Baker warned that disruptions from the conflict are expected to have a negative impact on the IET segment's revenue of 1%-2%.
According to data compiled and analyzed by LSEG, the company expects third-quarter revenues from its IET segment to range between $3.17 billion - $3.47 billion. This is below analyst expectations of $3.79billion.
CFO Ahmed Moghal stated that while the overall impact of Middle East disruptions is expected to be modest, we anticipate an increase in the pressures on logistics and inflation at our regional facilities for the third quarter.
Moghal said that the impact of the Iran War is expected to be offset if there are strong regions outside the Middle East.
In Latin America, Brazil and Mexico are expected to drive growth.
Baker Hughes also relies on areas of growth such as LNG infrastructure, power grid upgrades and other resilient areas to help oilfield contractors deal with the volatility in oil prices.
The company said it would expand its 'gas turbines and generators capacity', which will be online by 2029. This is expected to support nearly $5 billion of annual revenue in power systems. Reporting by Vallari Shrivastava in Bengaluru and Sumit Saha; editing by Leroy Leo
(source: Reuters)
